Optoro Raises $25M, Led By Zebra Technologies

Optoro co-founders feature

Optoro co-founders Adam Vitarello (left) and Tobin Moore (source: Optoro)

Optoro, provider of returns services for retail and ecommerce, has raised $25 million in a funding round led by Zebra Technologies, whose handheld scanning devices run Optoro software for processing returns in store and in warehouses, giving Optoro access to Zebra’s large customer base.

Along with Zebra, participants in the strategic investment include Volta Circle, plus previous investors eBay and UPS.

Returns are indeed a rapidly growing problem in ecommerce, highlighted by peak season volume. According to a new report from Optoro and commercial real estate firm CBRE, 30% of online sales this holiday season, valued at $66.7 billion based on NRF’s projections, will be returned. This is up 13% from 2020 and up 45.6% from the previous five-year average. And the cost of processing returns will increase 7% this year vs. last, according to CBRE/Optoro data.

Tobin Moore, co-founder and CEO of Optoro, said while most supply chain investments have gone toward forward logistics, companies are realizing they need to solve the massive returns conunudrum, which represent about 25% of all goods sold online.

“It gets quite complicated coming back in different conditions, into different channels, at different price points,” Moore said. “Initially we focused on solving returns for the biggest retailers, but with the shift online, we’re continuing to invest in expanding the overall solution to make it more accessible downstream, for companies with $25 million or less in annual online sales.”

Major Optoro clients include American Eagle Outfitters, Best Buy, Target, Staples and IKEA.

Moore said Optoro focuses on three primary areas, which it will invest in using the new funds: Returns initiation and the customer experience (including express dropoff at 1,000 Staples stores), returns management (including processing and triage), and handling inventory and out-of-stock issues.

“Both store clerks and warehouse associates use handheld devices with our software to scan, grade and test returns, whether they’ll be resold, recycled or sold wholesale, and typically with our clients they’re from Zebra,” he said. “The software draws from real-time market data to provide instant feedback. We want to create a better solution using their hardware and our software to further automate the process, making it faster and more cost efficient.”

With so much inventory tied up around the globe – an estimated 15% of it at sea, according to Moore – out of stocks have become a huge problem in retail and ecommerce. He said Optoro is helping retailers solve this issue by quickly getting more returns back to stock and available for full-price sale, especially time-sensitive fashion items.

“With fashion retailers, 30% to 50% of online sales are returned, and 70% to 90% of them are new with tags,” Moore said. “It takes on average a couple months to ship them back, receive them, process them, get them on a shelf and in the right channel, and by then you’ve missed the season and it’s marked down. We can help them get items back to stock within hours of hitting the returns center, selling in season and fulfilling shortages.”

Moore said Optoro was able to help American Eagle Outfitters reduce its returns processing time from an average of 45 days to under a week. For another large retail client, he said, returns were used to fulfill 20% of its backorders.